In this morning’s data, the Consumer Price Index increased 0.8% in November, slightly more than expected, and increased 6.8% on annual basis, the highest annual increase since 1982. Prices for Energy Commodities, including Motor Fuel, were strong while prices for Hospital Services were weak. Prices for Used Cars and Trucks were up 2.5% in the month; still increasing, but less than earlier in the year. The core rate, which excludes prices for food and energy, increased 0.5% in November, as expected, and increased 4.9% on an annual basis. Overall, inflationary pressures remain stubbornly high, well above the Federal Reserve’s 2% average target for core rates, given the impact of supply constraints amidst increased demand as the economy improves. Next week, the Federal Reserve is likely to announce increasing the speed of tapering back their asset purchases and may need to proceed with rate increases sooner than they originally thought. The impact of these dynamics on consumer behavior, in terms of both confidence and spending, will be key for the economy in the months ahead. In all, the 10-year U.S. treasury yield ticked lower following the release of the data and equity futures are higher as we head into the market open.
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